Categories Earnings, Technology

Deal Alert: Walmart, Microsoft find a common enemy in Amazon

Less than a week after striking a crucial deal with data-warehousing start-up Snowflake Computing to offer the latter’s service on the Azure cloud platform, Microsoft (MSFT) has entered into a bigger tie-up, this time with retail behemoth Walmart (WMT).

What makes the partnership a win-win deal for Microsoft and Walmart is that it complements their efforts to fight against a common rival – Amazon (AMZN). By moving the IT operations to Azure, Walmart is taking a big leap in its transformation into a full-fledged e-commerce retailer. While Walmart and Amazon are among the fiercest rivals in the retail space, Azure is a direct competitor to Amazon Web Services. That makes it a dangerous combination as far as Amazon is concerned.

In the words of Microsoft CEO Satya Nadella, the shared rivalry between his company and Walmart against Amazon is “absolutely core” of the collaboration. According to sources close to the matter, Walmart is looking to transfer most of its tech division to Azure within five years.

The partnership is a win-win deal for the companies as it complements their efforts to fight against a common rival – Amazon

In all probability, Walmart’s long-term agenda might include setting up of stores in the lines of Amazon GO, a futuristic concept that offers a cashier-less shopping experience to customers. Since last year, Walmart has been busy testing an e-store that functions without checkout stations and cashiers. Also, it needs to be noted that Amazon is planning to expand the GO franchise to six more locations, encouraged by customers’ overwhelming response.

Initially, the scope of the partnership will be limited to the migration of Walmart’s online shopping platform and applications to Azure. However, there are areas of cooperation exclusive to the brick-and-mortar business model. They include having an Internet of Things (IoT) platform on Azure to manage the movement of the trucks in Walmart’s supply chain and to streamline the performance of the company’s HVAC units.

Interestingly, Microsoft has reportedly offered to provide Walmart with important data related to its products and customers. Considering the recent controversies involving data privacy, the company might be required to reveal details of the data transfer to regulators.

Like most of its peers in the tech sector, Microsoft stock made significant gains since the beginning of 2018 and hit an all-time high last week. The shares traded slightly higher in early trading Tuesday. Meanwhile, Walmart declined progressively in most of 2018, before rebounding modestly early this month.

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